Federal Fisker Fiscal Failure Faulted

Washington Post columnist Charles Lane thoroughly deconstructs the Obama Administration's failed efforts to use taxpayer funds to play "green" automobile venture capitalist. As reported earlier this month, the electric car company Fisker Automotive has gone the way of Solyndra leaving taxpayers with a $171 million loss on their "investment." Lane points out that free federal money often misleads private sector investors into throwing their money at such projects. Lane points out that this pernicious practice has consequences beyond just the waste of federal dollars.

Lane correctly writes:

Of all the arguments for the Obama administration's green-energy loan program, one of the worst is that federal aid leverages private capital.

Fisker argued for the federal loan on the grounds that it would help the company attract private investment. It did:

A month later, in September 2009, the Energy Department approved a $529?million low-interest loan. Vice President Biden stood before the proposed site of a Fisker plant in Delaware and described the department's program as "seed money that will return back to the American consumer in billions and billions and billions of dollars of good new jobs."

Sure enough, private money started flowing in to Fisker by the tens of millions. Apparently, investors liked the idea of a firm that enjoyed access to cheap government funding.

All told, Fisker attracted $1.1?billion in private investment, the vast majority of which took place after it got the DOE loan.

Fisker failed and the result is not only are taxpayers out $171 million, but as Lane notes the deal resulted in the waste of …

… more than a billion dollars in capital that can't create jobs elsewhere in the economy — but might have, if the government had not propped up and promoted Fisker.

Lane concludes:

Government can efficiently affect energy usage through fuel taxes and basic research. When it intervenes on behalf of specific technologies and specific companies, however, bad things happen — resource misallocation, windfall-seeking, even, sometimes, corruption. The Fisker debacle proves once again that, in the immortal words of former White House economist Larry Summers, "government is a crappy VC."

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I spent the morning working up some cast bullet loads for my 450 marlin using the only powder I have been able to find in stock anywhere, Varget. There is nothing I would rather do than play around at my reloading bench, so I was in a fantastic mood. I went out and tried out the last batch…beautiful. My 300 grain cast bullets punch through three pieces of oak firewood and stick in the 4th, mangled but retaining 280 grains of lead.

I came back in and made the mistake of turning on the TV. I should have known better.

Joe Fucking Leiberman is trying to sell us on going to war in Syria. He says we need to lead. The world will be a safer place. Plus Feinstein told him the Syrians are using chemical weapons.

I wonder how the Dems will react to being tricked into a shitty war by the Black Jesus instead of that evil hick from Texas and his sidekick ‘The Penguin’?

[…]more than a billion dollars in capital that can’t create jobs elsewhere in the economy ? but might have, if the government had not propped up and promoted Fisker.

This is an excellent point but one that is lost among those on the left and, unfortunately, many on the right. They still fallaciously cling to the notion that government produces wealth by redistributing wealth, when in fact the government is not adding anything to the wealth pool.

People see the process of propping up the economy as taking material from a mountain (the amorphous concept of capital used by Keynesians) to then use it as if soil to grow trees in the fields. Government as farmer, growing things.

Instead, the effect on the economy of government redistribution is like government thinking itself a bridge engineer and taking beams or stiles from one part of a BRIDGE to prop up another side of the SAME bridge in the illusion that the bridge will become better – until it collapses. The private sector would instead replace the bad parts of the bridge with good elements and use the bad elements to repurpose them for other things, growing and strenghtening the bridge in the process.

Capital is like the different parts of a bridge; capital is thus not all the same. You take capital from one side and use it for something else without the knowledge and the market analysis and you will make the whole thing collapse.